For insurers, 2017 was defined by a series of natural and man-made disasters that resulted in record-breaking losses. To that point, last June, we looked back on the 25th anniversary of Hurricane Andrew asking, “Are we ready for the next Hurricane Andrew?" And it wasn't long before we soon had to answer the question after hurricanes Harvey, Irma and Maria (HIM) caused devastating losses in the US and Caribbean. Each of these storms landed as category 4+ hurricanes and caused damages in excess of USD 30bn.

Insurers responded impressively, but our claims professionals were tested by the unique and complex characteristics of these storms. HIM were hurricanes, but also very different events for our industry. In the first sigma this year, there is some great data and analysis about what happened. It makes sense to spend a lot of time talking about what happened after these events, but we should also talk about what needs to happen to make claims teams (and our industry) more resilient to these losses in the future.

Irma hit Caribbean Islands with wind speeds of up to 185 mph. Facing the threat of a category 5 hurricane on a path towards Miami, Florida officials ordered widespreadevacuations. Fortunately, by the time Irma made landfall in Florida, the path changed and the wind speeds slowed. Even so, policyholders filed over 924,000 Irma claims, according to the Florida Office of Insurance Regulation. Critical resources — like staff and field adjusters and experts — were scarce, with many still assigned to the arvey losses. The evacuations brought fuel shortages and other logistic difficulties in adjusting the losses. Companies saw loss-adjustment expenses increase. And although we would like to believe these types of clustered events that severely strain our resources are rare, the truth is they are not unprecedented and are likely to continue. How we adjust claims in the future is going to change — by design and by necessity. Solutions are going to require attracting and retaining talent (which is also effectively used during non-cat times), improving the efficiency of our claims model, and leveraging technology — all the while keeping our policyholders happy. The latter is the more difficult challenge, but one that Swiss Re is ready to face with our clients.

Maria was the largest insurance loss event globally in 2017. Puerto Rico's infrastructure suffered significant damage. The power grids on the islands were decimated. In Puerto Rico and in the Virgin Islands, nearly 100% of the power supply went down immediately after the storm. The power outages were prolonged, with some areas without power six months after Maria. An estimated 135,000 Puerto Rico residents have relocated to the mainland US, and many simply abandoned damaged property, further complicating insurers' efforts to rebuild. The business conditions on Puerto Rico, already suffering from economic challenges, will be very slow to recover, making the adjustment of business-interruption losses difficult. The protection gap was evident in Puerto Rico, where only an estimated 45% of the losses were insured. Maria was also the third category 4+ hurricane to hit landfall in less than a month. The need to deploy adjusters and experts to the island was complicated not only by a shortage of human power, but by difficulties in getting access to and within the island. One notable thing is that public adjusters, not previously active in the market, wereable to establish a stronger presence. There is no question insurers alone cannot rebuild economies after losses like Maria that impact whole islands. Are there ways the industry can look for more opportunities to partner with governments, private aid organizations and other private industries to make communities more resilient to future events?

HIM reinforced that the challenges we face are complex and reminded us how important our work is. At Swiss Re, we believe that reflection must include searching for broader solutions with our clients. In May and June, we are hosting Cat Claims Advisory roundtables with select Swiss Re clients to listen as they share their HIM experiences and explore how claims organizations can respond more effectively to devastating natural catastrophes. Are there significant, real changes we can address collectively? We are committed to working with our clients to pursue effective, lasting solutions to make the world more resilient.

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